I had a similar problem that was very difficult to diagnose.
I actually ended up taking it entirely a part including splitting the cases NINE TIMES!
In the end I bought a used transmission off Ebay for $165.
Looking back at it now I think I got too aggressive with a rubber mallet when putting the transmission back together. I had never split cases before and I had it a part for abut a year.
I believe I bent/tweaked number 1 in this drawing since it's all I replaced and now it works great.
http://www.ronniesmailorder.com/oemparts/a/suz/508b1d5df870023530723f60/transmission-model-k4-k5-k6

Check the drain plug. Very common for a knucklehead to have stripped it out & then goobered it up with silicon seal or some such crap to stop the leak.
( I did this one when I was a young knucklehead)
Also see if the air filter has oil on it. It seems obvious but I looked at a 2001 YZ250 in the year 2001 out of a Craigslist ad. The filter was dry & clean. I asked him why it didn't have oil on it.
He said the manual said to clean it. I said yes, it also says to oil it after cleaning it.
I didn't buy this bike by the way.

It may sound flippant or even seem too obvious to mention, but when you have been shooting at the same target for a long time without hitting a bull's-eye, change your target. Suzuki has never strayed far from class leadership in handling or suspension, and especially in the last few years, its bikes have been really competitive. But when we get all the bikes on the track at once, it is rare that a yellow machine dominates. The frustrating thing is how close they have come. They aren't losing by a knockout, more like a split decision. And while quick handling has had an effect on the outcomes--one man's cutting edge hacks away at another man's comfort zone--the power character has been the difference. The truth is Suzuki's tendency to produce motors that make go-power via rpm has been a negative factor.
What's New
• Seat 10mm lower than '03.
• Quick-adjust clutch perch.
• Suspension has refined valving front and rear, with redesigned compression valve for better hookup with new link.
• Linkage rods attach to swingarm rather than frame.
• Redesigned front-brake master cylinder and Honda-style hose routing for aftermarket performance now come stock.
• Wheel drag is reduced via a floating front disc and a new carrier in rear.
• One-piece rear master cylinder/reservoir.
• Reshaped cylinder head for better performance on pump gasoline.
• Exhaust subport valves modified to open slower for better roll-on power.
• Added crankshaft inertia for more traction.
• Piston-ring cross section changed from sharp-edged rectangle to barrel shape with rounded corners for better sealing and reliability.
• Exhaust-valve governor spring 20 percent stiffer for better valve control and later actuation.
• New needle series with different shape and leaner slide for crisp bottom-end response.
• Shift cam is redesigned for more positive shifts, and shift stopper spring is 50 percent stiffer.
• Front of the frame strengthened by increasing gusset plate thickness from 1.4 to 1.6mm.
• Footpegs located 10mm back from '03 position and handlebar mounts raised 7mm, but seat is 10mm lower--all to improve cornering.
• Showa suspension components.
• A 22.5mm offset on the triple clamps rather than the 24.5 in '03 for more precise turning.
What's Hot!
• Power is much improved with stronger, meatier midrange that lets the RMs pull out of turns and up hills with authority.
• Ergonomics are improved, with new seat shape allowing the rider to sit more in the bike than on it.
• Improved braking feel and power.
• Rear suspension action is improved, and new linkage allows the RMs to track straighter than ever.
• Handling is still nimble with very accurate steering.
• Very light feel on the track or in the air.
• Showa suspension offers great bottoming control.
• Motor has massive meat in the midrange, good roll-on and strong top-end.
What's Not!
• Engine hits so hard it demands good throttle control on slippery tracks.
The '04 250's engine overhaul created big boost. Along with the motor improvements, the new RM250 also received a switch back to Showa suspension as well as some needed changes in braking performance and rider positioning.
Suzuki now has engines that seem able to stand toe-to-toe with the toughest bullies in either class--not just on the straights and hardpack but off the starting gate, out of deep and loamy berms and up sandy hills. Both RMs hit hard, pull long and strong and pick up each gear quicker than spilled M&Ms at a Weight Watcher's meeting.
In the 250cc class, the RM250 has usually lacked the results even the yellow 125 generates, for much the same reason. The motor is zingy when modern tracks and riders demand grunt and tinny when it should have torque. For 2004, the powerplant received some major changes to make it sound deep and scary-fast on the uphills. It puts the massive mid-punch power to the track better and pulls higher gears (similar to four-strokes). The motor has plenty of power down low and through the middle of the powerband, and revs out quickly at higher rpm. Cahuilla Creek was a great test of the engine, and the Suzuki had no trouble pulling a tall gear anywhere on the deep, loamy track, yet its power delivery was very smooth and responsive.
The brakes received the same changes as the RM125, which not only increased the braking power but also helped shave some weight and increase durability. How's that for win-win?
The suspension and handling are very balanced, and the new-to-the-250 Showa components have the necessary plushness for lighter testers, though some softened the compression two or three clicks at each end. Bottoming resistance has also been improved over last year's bike with the new bottoming cones that prevent metal-to-metal clank. The 250 tracks and turns impressively, and at least part of that prowess can be credited to its refined ergonomics. As on the 125, the seat is 10mm lower, but its pegs were relocated 10mm farther back and the handlebar mounts raised 7mm.
The combination of changes and the firm yet plush seat foam (which rivals Honda's) make rider positioning a low-effort, intuitive task. The rider feels as if he is sitting down in the bike rather than on top of it, which makes turning easier and more fun.
Suzuki pulled the triple clamp offset in 2mm for better cornering.The RM250 has always been known for precise handling, but the gnarly yet tractable power and more natural riding position calm the demanding chassis somewhat. Even though the 250 has a tighter fork offset than the 125, the stability at speed and safe feeling on high-speed straights and jumps is welcome.
Our test crew has already ridden the 2004 Honda CRF450R and Yamaha YZ250, and those machines were the toughest competition the RM250 faced in 2003. Even so, the RM generated unanimous positive feedback from all. It looks like a great year to be yellow.
What's New
• Seat 10mm lower than '03.
• Quick-adjust clutch perch.
• Suspension has refined valving front and rear, with redesigned compression valve for better hookup with new link.
• Linkage rods attach to swingarm rather than frame.
• Redesigned front-brake master cylinder and Honda-style hose routing for aftermarket performance now come stock.
• Wheel drag is reduced via a floating front disc and a new carrier in rear.
• One-piece rear master cylinder/reservoir.
• Reshaped cylinder head for better performance on pump gasoline.
• Exhaust subport valves modified to open slower for better roll-on power.
• Added crankshaft inertia for more traction.
• Piston-ring cross section changed from sharp-edged rectangle to barrel shape with rounded corners for better sealing and reliability.
• Exhaust-valve governor spring 20 percent stiffer for better valve control and later actuation.
• New needle series with different shape and leaner slide for crisp bottom-end response.
• Shift cam is redesigned for more positive shifts, and shift stopper spring is 50 percent stiffer.
• Front of the frame strengthened by increasing gusset plate thickness from 1.4 to 1.6mm.
• Footpegs located 10mm back from '03 position and handlebar mounts raised 7mm, but seat is 10mm lower--all to improve cornering.
• Showa suspension components.
• A 22.5mm offset on the triple clamps rather than the 24.5 in '03 for more precise turning.
What's Hot!
• Power is much improved with stronger, meatier midrange that lets the RMs pull out of turns and up hills with authority.
• Ergonomics are improved, with new seat shape allowing the rider to sit more in the bike than on it.
• Improved braking feel and power.
• Rear suspension action is improved, and new linkage allows the RMs to track straighter than ever.
• Handling is still nimble with very accurate steering.
• Very light feel on the track or in the air.
• Showa suspension offers great bottoming control.
• Motor has massive meat in the midrange, good roll-on and strong top-end.
What's Not!
• Engine hits so hard it demands good throttle control on slippery tracks.